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It should be noted that Texas history is filled with citizens from other states and countries moving to Texas to escape debt and not so friendly debt collection laws, including in some instances, debtor’s prison.  For example, William B. Travis avoided arrest in Alabama for unpaid debts by moving to Texas.

As a result, the early Texans were not so fond of government interference in their private matters, including debt-collection.  That legacy still exists in Texas today.  Obtaining a judgment against a citizen of Texas may be one thing.  But collecting it is certainly another.

Chapters 41 and 42 of the Texas Property Code set forth certain property classifications which are “exempt” from execution by a judgment creditor.  Execution is the process of forcefully taking the property of a debtor, selling it, and paying the proceeds to a judgment creditor.  If the property is exempt, it may not be taken to satisfy a judgment debt.

Chapter 41 of the Texas Property Code deals with exempt real property.  Real property includes any permanent improvements and fixtures located on land.  Except for certain permitted types of liens and removables, a “homestead” and one or more lots used for a place of burial are exempt from seizure for the claims of a judgment creditor.

In order to qualify as a homestead, the real property (and improvements) must be categorized as either “urban” or “rural”.  If a property is “urban”, then the homestead exemption is limited to 10 acres.  If a property is “rural”, then for a single adult person the  homestead exemption is limited to 100 acres, and for a family the exemption is  limited to 200 acres.

A property is considered “rural” if it is not “urban”.  A property is considered “urban” if the property is located within the limits of a municipality or the extraterritorial jurisdiction of a municipality or a platted subdivision; and is served by policy protection, paid or volunteer fire protection, and at least 3 of the following services provided by a municipality or under contract to a municipality: (a) electric, (b) natural gas, (c) sewer, (d) storm sewer, and (e) water.

The proceeds from the sale of a homestead continue to be exempt for a period of 6 months following the date of sale.

Chapter 42 of the Texas Property Code addresses exempt personal property.  Personal property includes moveable property which is not real property.  Certain amounts and types of personal property are exempt from garnishment, attachment, execution, or other seizure.  The amount is limited to $100,000.00 of the combined fair market value of the personal property of a family.  For a single adult, the exemption amount is limited to $50,000.00.

The following are types of personal property that are exempt so long as the combined value does not exceed the limitations set forth above:

  1.  home furnishings, including family heirlooms;
  2.  provisions for consumption;
  3. farming or ranching vehicles and implements;
  4. tools, equipment, books, and apparatus, including boats and motor           vehicles  used in a trade or profession;
  5. wearing apparel;
  6. jewelry not exceeding 25% of the aggregate limits set forth above;
  7. two firearms;
  8. athletic and sporting equipment, including bicycles;
  9. a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each     member of a family or single adult who holds a driver’s license or who     does not hold a driver’s license but who relies on another person to           operate the vehicle for the benefit of the nonlicensed person;
  10. the following animals and forage on hand for their consumption:
    1.  horses, mules, or donkeys and a saddle, blanket, and bridle for                  each;
    2. 12 head of cattle;
    3. 60 head of other types of livestock; and
    4. 120 fowl; and

k. household pets.

Unpaid commission for personal services not exceeding 25% of the limitations set forth above are also exempt from seizure.

The following are the types of personal property that are exempt and their combined value is not included in the limitations discussed above:

  1. current wages for personal services (except for court-ordered child support payments);
  2. professionally  prescribed health aids of a debtor or a dependent of a debtor.
  3. alimony, support, or separate maintenance received or to be received by the debtor for the support of the debtor or a dependent of a debtor; and
  4. bible or other religious book containing sacred writings (excludes a landlord exercising a contractual or statutory right to seize property after a tenant’s breach of a lease or abandonment of the leased premises).

Additionally, certain savings and retirement plans and college savings plans are also exempted from seizure.

 

Texas Property TAZThe State of Texas’ power to tax does not come from the U.S. or Texas Constitution. It is an inherent power associated with the sovereignty of the state. On the other hand, the taxing power of Texas counties, cities, and school districts is solely derived from the Texas Constitution, statutes, and municipal charters. The Texas Tax Code grants these subdivisions of the state the authority to tax all real property located within the state. Real property includes land, improvements, mines, quarries, minerals in place, and standing timber.

Only real property located within the jurisdiction of a particular taxing unit as of January 1 is taxable by that unit for that tax year. The tax on real property is primarily based upon the market value of the property as of January 1 of a particular tax year. Market value is determined by using generally accepted appraisal methods and techniques which are supposed to be consistent in appraising the same or similar kinds of property. Each property must be appraised in light of the specific individual characteristics that affect market value, and appraisal process must consider all available evidence in determining a property’s market value.

Typically, sales of nearby residential property will be used to determine comparable property values in the appraisal process using the market data method. These sales, which may even include certain foreclosure sales and properties located in a declining market, must have occurred within 24 months, and should have similar locations, square footages, ages, conditions, access, amenities, views, occupancy, easements, deed restrictions, and other benefits and burdens which may affect marketability. In counties with a population of at least 150,000, sales must have occurred within 36 months and be adjusted to account for changed market conditions.

In most situations, the chief appraiser of the taxing district is required to send each property owner a notice of appraised value for homestead exempted property on or before April 1, and for other properties on or before May 1. This notice must accompany a copy of a notice of protest form and instructions on completing and mailing the form to the appraisal review board to request a hearing. If the taxing district fails to provide any required notice to the taxpayer, the taxpayer’s due process rights are violated, and any appraisal or tax assessed on the property is void. It should be noted that “failing to provide notice” doesn’t mean mailing the notice to the wrong address because the taxpayer failed to notify the taxing district of an address change. Failing to provide notice means that no notice was ever sent anywhere. It is the taxpayer’s duty to keep the appraisal district supplied with a current address.

If a property owner disagrees with a notice of appraised value, they are normally entitled to file a protest with the appraisal review board. The protest must be in writing and timely filed. Generally, the protest must be filed not later than the 30th day after the notice of appraised value was delivered to the property owner. For a homestead exempted property, the notice of protest must be filed before May 1 or not later than the 30th day after the notice of appraised value was delivered, whichever is later. Failing to comply with the administrative protest procedures will result in the preclusion of any further appeal of the appraisal review board’s ruling. Appraisal districts in counties with a population of 500,000 or more must allow a property owner with a homestead exemption to file a notice of protest electronically.

Scott Alagood is board certified in residential and commercial real estate law by the Texas Board of Specialization and can be reached at alagood@dentonlaw.com or www.dentonlaw.com.